Workplace rights; safety net contractual entitlements

The issue of what constitutes a workplace right continues to hang arounds like a bad smell in current Australian workplace law. The concept of safety net contractual entitlements under sec 12 of the Fair Act is of profound importance to the general protections and is a matter which many lawyers who claim to be specialists in employment law are (at least as far as I have experienced in many general protections’ conciliations) are ignorant of.

Here is an example of the principles in action.

“However, contractual entitlements are not generally seen as workplace rights for the purposes of s.341(1)(a) of the Act.  An employment contract is not a workplace law, workplace instrument or order made by an industrial body.  The point was considered by Mansfield J in Barnett v Territory Insurance Office (2011) 196 FCR 116. His Honour said:

[31]  In my judgment the expression “an instrument made under or recognised by a workplace law …” in the definition of “workplace instrument”, in conjunction with the definition of “workplace law” means an instrument must be given legal significance by reason of a particular workplace law.

[32]  The definition of ‘workplace law’ refers to enactments of a particular character.  The specified enactments may give particular legal significance to an instrument or to a role adopted under an instrument. It is the status of the instrument or of the activity under an instrument to which attention is drawn by the particular ‘workplace law’. The mere fact of the existence of a contract of employment does not enliven the relevant concept of recognition contained within the definition of ‘workplace instrument’. If it were simply the existence of a contract of employment on which the particular enactment operated, the expression of ‘made under or recognised by’ would have been unnecessary. It would have been easy to have indicated that s 340(1)(a) includes a right under a contract of employment. It is also more consistent with the grouping of ‘workplace law’, ‘workplace instrument’ and ‘order made by an industrial body’ in s 341(1)(a) that the reference to recognition by a workplace law in the definition ‘workplace instrument’ should refer to an instrument that is given legal effect or legal life by a provision of an enactment. Those three sources of the existence of a ‘workplace right’ may be taken to have a common type of origin, or genus, in either an enactment or some formal process provided for by an enactment. That, too, is consistent with the genus in the ‘workplace law’ definition, as (d) of that definition is confined to enactments as distinct from private contracts. That interpretation also avoids the potentially idiosyncratic outcome that a written contract of employment might contain a term which would give rise to a workplace right (if the argument for the appellant were accepted), whereas an oral contract of employment providing for the same term would not because it could not be an instrument.

His Honour’s decision was applied in Salby v Macquarie University & Anor [2016] FCCA 3; Rahman v Commonwealth of Australia as represented by the Australian Taxation Office [2014] FCCA 6 and Daw v Schneider Electric (Australia) Pty Ltd (2013) 280 FLR 361.

Thus, the contractual entitlement to redundancy payments is not, per se, a workplace right in the sense defined in s.341 of the Fair Work Act.

However, clause 75 of Mr Martens’ contract is a safety net contractual entitlement for the purposes of the Act.  The phrase safety net contractual entitlement is defined in s.12 of the Act as follows:

Safety net contractual entitlement means an entitlement under a contract between an employee and an employer that relates to any of the subject matters described in:

(a)  subsection 61(2) (which deals with the National Employment Standards); or

(b)  subsection 139(1) (which deals with modern awards).

Clause 75 of Mr Martens’ contract represents an entitlement under his contract that relates to a subject matter described in s.61(2) of the Act – the National Employment Standards.  One of the subject matter areas listed in that subsection is notice of termination and redundancy pay: s.61(2)(i) of the Act.

The respondents argue that a safety net contractual entitlement is not a workplace right for the purposes of s.341 of the Act and cannot found a general protections claim.  The respondent’s point out that additionally, the Court cannot make any order in respect of a contravention of the safety net contractual entitlement because it is not a civil penalty provision.

However, the Fair Work Act gives an employee a remedy in respect of contraventions or non-observance of safety net contractual entitlements. The Act provides:

542  Entitlements under contracts

(1)  For the purposes of this Part, a safety net contractual entitlement of a national system employer or a national system employee, as in force from time to time, also has effect as an entitlement of the employer or employee under this Act.

(2)  The entitlement has effect under this Act subject to any modifications, by a law of the Commonwealth (including this Act or a fair work instrument), a State or a Territory, of the safety net contractual entitlement.

543  Applications for orders in relation to statutory entitlements derived from contracts

A national system employer or a national system employee may apply to the Federal Court or the Federal Circuit Court to enforce an entitlement of the employer or employee arising under subsection 542(1).

There is no dispute that the first respondent was a national system employer or that Mr Martens was a national system employee.

In my view, Mr Martens had an entitlement under the Fair Work Act (a workplace law) to apply to the Federal Court or this Court to enforce an entitlement that arose under s.542(1) of the Act. That entitlement – a safety net contractual entitlement – arose not from his contract of employment, although the existence of a contractual term about it was a necessary precondition to the statutory entitlement, but from the relevant workplace law itself – s.543 of the Fair Work Act.

Additionally, Mr Martens had the ability to initiate and participate in a process or proceedings under a workplace law – namely the process provided for by s.543 of the Act. On the facts for which Mr Martens contends, his position was to be made redundant and there being a case of genuine redundancy, his entitlements under cl.75 of his contract were engaged. If engaged, they took effect as an entitlement under the Fair Work Act enforceable by application pursuant to s.543 of the Act. To the extent that the respondents contend to the contrary, I reject those submissions.

However, Mr Martens’ case is not that any adverse action was taken against him because he had those rights or he intended to exercise them.  The respondent did concede that Mr Martens could rely on s.96 and 97 of the Act (the National Employment Standard personal or sick leave provisions) and s.119 of the Act (the National Employment Standard redundancy pay provisions) to maintain that he had relevant workplace rights for the purposes of s.341(1)(a) of the Act.

Mr Martens also argues that he had a workplace right that sprang from s.389 of the Fair Work Act. That section defines the circumstances in which a person’s dismissal will be seen as a genuine redundancy (s.389(1)) and when it will not( s.389(2)). That definition is relevant to that part of the Fair Work Act that deals with unfair dismissals. Specifically, it is relevant to when a person will be seen to have been unfairly dismissed for the purposes of s.385 of the Fair Work Act. It does not create a workplace right in the sense promoted by Mr Martens in this case.

Section 361 of the Act is important.  It creates a statutory presumption that casts upon an employer in appropriate circumstances the burden of proving that its actions did not constitute adverse action for a proscribed reason.  A person takes action for a particular reason if the reasons for the action include that reason (s.360 of the Act).  However, the reason must be a substantive or operative factor in order for there to be a contravention.

The onus cast upon an employer by s.361 of the Act is usually discharged by the decision-maker giving evidence (accepted by the Court) that the reasons for taking the adverse action did not include a prohibited reason.

However, before s.361 is engaged, an applicant must prove the existence of the objective facts which are said to provide the basis of the employer’s contravening conduct. Section 361 is not engaged unless and until an applicant establishes the elements of each of the general protections upon which he seeks to rely. It is not enough to merely make assertions, they must be determined objectively and have a foundation in evidence.

Against that legal framework, it is necessary to turn to the facts of the case.”

Martens v Indiginous Land Corporation (2017) FCCA 896 delivered 4 Masy 2017 per Jarrett J